The strategy of the company to invest in services that makes as easy as possible for customers to purchase its products online and get delivery on the same day of Target apparently is paying off as its business is booming.

There was a 31 per cent growth in the sale through the company’s digital platform for the latest quarter for which the company announced its earnings on Wednesday. Target also said that 80 per cent of the digital sale growth in the quarter was accounted for by its same-day services. Buy online, pick up in store, same-day delivery via its Shipt network and a curbside pickup option comprises the same day services.

Analysts and investors were concerned about a trend among major retailers of choosing to focus on sale through online channels because such sale is less profitable as the companies need to expend money to get the products delivered to the customers’ homes. Walmart, the largest retailer of the world, is also investing in its online platform and is losing significant amounts on it.

However target said that it has managed to reduce costs and make profits on online sale.

“When it’s delivered by our stores … those look a lot more like store economics,” CEO Brian Cornell said during an interview to a television channel.

“About 40% of the cost goes away” when the company completes an online sale for its products from the back of its stores in comparison to shipping the products through a distribution center, he said. Cornell also added that “about 90% of the cost goes away” when the customers use services such as pick up at a store, use curbside pickup or select shipping via Shipt for completion of their online order delivery.

“We certainly like that,” he said.

In a similar strategy, in-store pickup for grocery orders is also being added by Walmart and the services are now available at 3,100 of its stores.

According to analysts, this is one aspect of the business that Amazon will not be able to offer competition in terms of the size and scale because the online retailing company does not any network of stores remotely close to what Target and Walmart has, for customers to pick up their orders. However Amazon has been adding Amazon lockers to its Whole Foods grocery stores and shopping malls.

Announcing the quarterly results, Target noted a 15.5 per cent growth in its net income ay $706 million in the quarter ended November 2. In the same period last year, the company had reported net income of $616 million.

The good quarterly results also prompted the company to raise its full-year profit outlook and the company said it now expects its adjusted earnings per share for the full-year to be within a range of $6.25 to $6.45. Earlier the company has estimated the number to be between $5.90 and $6.20. Analysts had been calling for earnings per share of $6.18.

The good results and raised forecast resulted in a 10 per cent rise in its share price.

(Adapted from CNBC.com)

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